24 October 2009

Dr Grumble is not a manager. He was once but he isn't now. He has decided to focus on his clinical work. One reason he is not a manager now is that his heart is not in management. He does not think the NHS is heading in the right direction.

Dr Grumble believes that we can still afford universal healthcare but that we do have to keep the lid on spending somehow and that privatisation will have the opposite effect.

Instead of thinking things through most of our politicians just follow the siren voices of those who stand to make money from privatisation. Proving to our masters that privatisation will cost more and not less is a challenge. Private is good. Private is efficient. That's the mantra. It is hard to gainsay.

But what is the evidence? Here from Canada are some bullet points that suggest that Grumble may just be right:

The British Medical Journal reported in 2004, that the public health system was charged 47% more for hip replacements performed in private surgical clinics than for the same procedures provided in public hospitals.

The for-profit cancer surgery clinic opened by the Conservatives was eventually closed down after the provincial auditor found that it cost $500 more per procedure than public hospitals.

Studies reported in the Canadian Medical Association Journal show that meta analyses of for-profit hospitals and clinics show that they not only cost more but they lead to higher death rates as the for-profits skimp on trained staff and quality.

The Alberta Branch of the Canadian Consumers Association studied wait lists and costs for cataract surgery in Alberta and found that wait times in Lethbridge with 100% public surgeries were less than half those in Calgary with the majority of the for-profit clinics, and costs were $400 less per eye for the same lenses.

17 comments:

It is not self evident when a price is too high or too low. Out of the universe of all goods, there really aren't any where state set prices have demonstrated themselves as superior to free market set prices.

The Canadian system has been and remains very hostile to private medicine. They have been forced to admit some private medicine because the Canadian government set prices so badly that the whole wait listed mess was considered illegal by several high courts.

A functioning free market drives down prices over time. In a shortage situation like Canada's where insufficient capacity to handle demand exists, prices will go up to draw in new suppliers, then decline as the suppliers fight to steal each other's market share, financing their price war with a desperate search for efficiencies.

Private medicine is not perfect. It is, over the long haul, sustainable. This is something that most governments are finding is not true of their public systems.

Privatization is great in areas where the consumer can make an informed choice or where choice is n matters such as accommodation and meals but privatization for the sake of privatization especially in areas such as medicine where the average Joe can't make decisions and the government is not good at contracting is asking for trouble.

Look to American the example of the free market which has the most expensive health care in the world all in a free market framework, just as the government can't set a realistic price, nor can the market unless the consumer has choice. Sick people usually don't have time for choice. They need treatment now not next year, after considering all the options.

The seductive argument is that a functioning market drives down prices. Everybody believes this so much that few question it and, as you say TMLutas, governments around the globe want to be rid of their public systems.

But where is the evidence that the market works for healthcare to minimise costs? It is a curious thing that markets are very effective at selling people things they don't need or could get for nothing. There is no doubt that that happens in healthcare.

So let's have some evidence, TMLutas. Doctors don't work on ex cathedra statements any more. Over the years there are many things that we knew to be true that turned out not to be. Common sense can cause you to get things very wrong at times. But we are convinced by evidence so let's have it.

It's Sunday morning. Dr Grumble has just finished his ward round. He has done it essentially for free. Certainly he would not do it for what he gets paid if he had the choice. But he does get a pension - so Dearieme is right.

It was the same with the GP out of hours. They did it for nothing. The GPs did it out of a sense of duty and tradition and as part of their old package. Now it costs much more and is much worse. But it is true that you can't just compare the prices.

Yes, it was striking to see the rejection rate pushing 50% in the US study David Colquhoun's blog discusses when ICU bed occupancy approached 90% - particularly as Mrs Dr Aust jokes that on the NHS HDUs and ICUs she has worked on it was widely believed that the managers were aiming for at least 90% occupancy, and preferably 100%.

TMLutas seems to believe that it is appropriate for healthcare to be delivered using market mechanisms to set prices.

This is an interesting (if provider-centric) thesis.

If we accept that healthcare is a public good, and that governments will always be significant actors in the payment for healthcare, then the untrammeled use of market mechanisms is debatable. It is even more debatable when government is significantly involved in the funding of healthcare infrastructure and training.

The US has taken the market approach to healthcare further than any other major developed country in the world. If market mechanisms were effective means of price-setting, then the costs of health insurance and the level of healthcare cost-inflation in the US would not sit where they do now.

Healthcare is not necessarily very amenable to market mechanisms. The costs of market entry are very high. Market exit has to be carefully managed. The costs of compliance with regulation are very high. The potential to harm your customer is very high (1 in 10 is the generally accepted rule of thumb). There are profound asymmetries of information and knowledge between providers and consumers about the product.

There are a range of heroic and questionable assumptions behind the belief that functioning free markets will deliver lower prices over time. Let's examine some important sectors of the economy:

Quite apart from the question whether consumer choice is relevant within medicine, who says that a "functioning free market" drives down prices? Is the housing market in the UK not functioning, not free, not a market, or can prices also go up? (And that is including the recent downturn: http://en.wikipedia.org/wiki/File:UK_house_prices_adjusted_for_inflation.png)

Andy Cowper said: "There are a range of heroic and questionable assumptions behind the belief that functioning free markets will deliver lower prices over time. Let's examine some important sectors of the economy:

The property market? No.

The banking market? No.

The public transport market? No."

He conveniently omits the airline industry where the functioning free market has driven prices down and forced British Airways to abolish restrictive practices and ineficciences prevalent in this former nationalised industry.

Is it fair to blame the problems of BA on its history? Wasn't privatisation over 20 years ago?

Even Michael O'Leary in a notorious interview in Germany admitted that you have to offer extra services on long haul flights. That's what markets do. When they can they try to offer more than the customer really needs. It works when people can afford it or when their business is paying.

As the recession has bitten, BA seems to be heading in the Ryanair direction while Mr O'Leary seems intent on providing services which will surpass those of BA.

"Is it fair to blame the problems of BA on its history? Wasn't privatisation over 20 years ago?"

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Well, yes actually. For example, BA's pension fund is crippled because it still has to maintain contributing and retired members who retain entitlement to an index-linked pension by virtue of the fact that they were in employment pre-privatisation. The fund was compelled to pay increases of 5% earlier this year in line with other public sector schemes, adding to its already burgeoning deficit.

There's a movement to radically change California government, by getting rid of career politicians and chopping their salaries in half. A group known as Citizens for California Reform wants to make the California legislature a part time time job, just like it was until 1966.www.onlineuniversalwork.com